CUC faces shortfall despite surcharge implementation

The Commonwealth Utilities Corp. will still be facing a monthly shortfall of $450,000 despite the scheduled implementation of the fuel surcharge in December.

CUC executive director Lorraine Babauta said the utility firm is now counting on the CNMI Executive Branch or the Legislature to cover the shortfall that will result from CUC’s decision to lower the fuel surcharge rate for residential and commercial customers.

With a 5-2 vote, the CUC board of directors approved last Friday the imposition of a fuel surcharge of 1.5 cents per kwh for residential, commercial, and profit customers, as well as a surcharge of 3.5 cents per kwh for government agencies.

CUC had wanted to implement a 3.5-cent, across-the-board fuel surcharge.

Currently charged 11 cents per kwh, households and non-profit groups will be paying 12.5 cents per kwh [not 13.5 cents, as earlier reported] for their electricity starting the Dec. 7 billing cycle.

On the other hand, businesses will be paying 17.5 cents per kwh and the government, 19.5 cents per kwh, starting next month. Both classes of customers are currently charged 16 cents per kwh.

“We welcome the board’s action. We think it’s going to help our situation. The board, of course, decided to go with the lower rates in order to reduce the impact to the CNMI population,” Babauta said in an interview Friday.

She added, “But of course, since [the board did not approve] the 3.5 cents across the board, there is still going to be some shortfall. We will need to work out that shortfall either with the Governor’s Office or the Legislature.”

Babauta explained that CUC had wanted to collect $1.25 million monthly from the fuel surcharge to cover the increased cost of fuel used in power generation. But since it will be imposing only 1.5 cents per kwh for residential and commercial customers, CUC stands to collect only $795,000.

This results in a shortfall of about $450,000.

“We are depending on the subsidy from the government. That subsidy has to come through. Otherwise, we will have no choice but to gradually increase the fuel surcharge to a maximum of 3.5 cents next year,” Babauta said.

A notice adopting the modified proposed regulations for the implementation of the fuel surcharge will be published on the Commonwealth Register today. The regulations will take effect 10 days after publication.

Under the approved regulations, CUC will implement starting December 2004 a fuel surcharge fee of 3.5 cents per kwh for government customers and a surcharge of 1.5 cents per kwh for all other classes of customers.

The regulations also state that the initial surcharge may be increased gradually or in a single increase, but it may not exceed the maximum level of 3.5 cents per kwh until December 2005.